Several different items had been placed on the agenda: receive and file an annual report by Downtown Inc., which manages the district; send assessment data from the district to the Orange County Auditor-Controller for the 2012-13 tax rolls; and set a public hearing to disestablish the district, formally known as the Downtown Santa Ana Community Management District.

The county had given the City Council until Aug. 10 to send the assessment data, and then extended that deadline to Aug. 31. City officials said Tuesday that the deadline could have been pushed beyond that date if the city were willing to pay a $15 per parcel fee.

Following a series of motions that failed to garner a 4-0 vote, the council finally decided to have the city attorney draft an ordinance that would repeal a 2008 law that the district is based upon – more lethal than a vote to disestablish it. It was supported by the four members able to vote on the issue: David Benavides, Sal Tinajero, Claudia Alvarez and Bustamante.

City Attorney Sonia R. Carvalho said she has held separate meetings with opponents of the district and with representatives of Downtown Inc.

"My recommendation is that I think we need to package this together with a full solution or resolution of the problem," Carvalho said. She said she hoped it could be presented Sept. 17.

Opponents contend that the assessments cost them as much as $9,000 a year, with no benefit, while supporters say they've benefited, citing the enhanced security, cleanup and marketing managed by the nonprofit Downtown Inc.

"Exploratory discussions have occurred," Nancy T. Edwards, interim executive director of the Community Development Agency, told the council.

The grand jury report said the city "appears to be in violation of state law" in the way it formed its downtown business-improvement district. The grand jury also found that because the city voted on behalf of its downtown properties in the election that formed the PBID, and then used the city clerk's office to tabulate the vote, "there is a lack of impartiality, or certainly the appearance of one," the report said.

After the meeting, Tinajero, who with Alvarez had placed disestablishment on the agenda, said the ordinance establishing the district likely will be repealed.

"It was a little clumsy in the way it was put together," he said. "If another one comes up, we can learn from this and make it more effective."